Curve v2: concentrated liquidity with dynamic pegging

Decentralized exchanges (DEXes) are experiencing rapid growth, with DEX monthly volumes reaching almost $90 billion in October 2021. Instead of order books, most DEXes adopt the automated market maker (AMM) design bootstrapping passive and algorithmic liquidity into liquidity pools that enable low-slippage trades with large notional sizes.

The Block Research has delved into various AMM designs that provide different trade-offs between capital efficiency, slippage, and impermanent loss (IL) — the loss in value when providing liquidity compared to just holding the assets.